2017 (1) TMI 79 - AT - Central Excise

Return of goods - disallowance of CENVAT credit on goods received back by the appellant owing to rejection by the customers - Held that - Emphasis is placed on Rule 16 of Central Excise Rules 2002 which make it clear that the goods on which duty had been paid at the time of removal can be brought back for refining, reconditioning, etc. with the entitlement to take CENVAT credit as though such goods are received as inputs - it is immaterial whether the good were brought back to the factory from which they were originally removed or into another factory belonging to the same assessee - appeal allowed - decided in favor of appellant.

Summary

Issues: Disallowance of CENVAT credit on goods returned by customers.

In this case, the Appellate Tribunal CESTAT MUMBAI dealt with two appeals from M/s Lime Chemicals Ltd concerning the disallowance of CENVAT credit on goods returned by customers due to quality issues. The orders in question were passed by the Commissioner of Central Excise (Appeals - II), Mumbai. The appellant, engaged in manufacturing 'calcium carbonate,' received returned goods at their Roha factory for reprocessing and recycling after customers rejected them for not meeting quality standards. The Central Excise authorities contended that this process violated CENVAT Credit Rules and Central Excise Rules 2002, leading to demands for the amounts in question. The appellant argued that Rule 16 of Central Excise Rules 2002 allowed for the return of goods for reprocessing with entitlement to CENVAT credit, regardless of the factory they were returned to. The appellant relied on various Tribunal decisions to support their case. On the other hand, the Authorized Representative cited a High Court decision emphasizing the need for specific invoices related to the assessee. The Tribunal found the appellant's arguments supported by the cited judgments and set aside the impugned orders, allowing the appeals.